1. Discuss the actions an auditor should take when an illegal act is identified or suspected 2. Auditors should be alert for potential judgment tendencies, traps, and biases that may impact their decision-making process. Identify and define four of these judgment tendencies. Then, for each judgment tendency, suggest a way to avoid or mitigate the tendency 3. Below are five audit procedures, all of which are tests of transactions associated with the audit of the sales and collection cycle. Also below are the six general transaction-related audit objectives and the five management assertions. For each audit procedure, indicate (1) its audit objective, and (2) the management assertion being tested. Audit Objectives urrn B completeness C. accuracy p. posting and summarization E. classification Assertions V. occurrence W. completeness X accuracy Y classification Z cutoff A. Vouch recorded sales from the sales journal to the file of bills of lading (1) B. Compare dates on the bill of lading, sales invoices, and sales journal to test for delays in recording sales transactions (1) C Account for the sequence of prenumbered balls of lading and sales invoices. (1) D. Trace from a sample of prelisting of cash receipts to the cash receipts journal, testing for names, amounts, and dates. (1) (2) E Examine customer order forms for credit approval by the credit manager (1) (2) 4. Below are five audit procedures, all of which are tests of balances associated with the audit of accounts receivable. Also below are the eight general balance-related audit objectives and the four management assertions. For each audit procedure, indicate (1) its audit objective, and (2) the management assertion being tested. Audit Objectives A. existence B completeness C. accuracy p. classification E cutoff F. detail tie-in G.realizable value Hnights and obligations Assertions V. existence W. completeness Xvaluation and allocation Y rights and obligations A Obtain an aged listing of accounts receivable. For a sample of individual customers on the listing agree the customer's name, amount, and other information with the corresponding information in the accounts receivable master file. (1) (2) B. 2. Examine details of sales for fire days before and five days after year-end to determine whether sales have been recorded in the proper period (1) (2) C. Assess the reasonableness of the balance in the allowance for doubtful accounts (1) (2) D Inquire as to whether any accounts receivable have been factored or sold during the period. E. Inquire as to whether there are any receivables from related parties (1)
